Helix Energy Solutions Group
Annual Report 2011

Plain-text annual report

HELIX RESOURCES LIMITED ANNUAL REPORT 2011 Drilling at the Joshua Project 2011 Contents Chairman’s Review ............................................................................. 2 Review Of Operations ......................................................................... 3 Corporate Governance ....................................................................... 14 Directors’ Report .............................................................................. 18 Auditor’s Independence Declaration ...................................................... 24 Independent Audit Report ................................................................... 25 Directors’ Declaration ........................................................................ 28 Statement Of Financial Position ............................................................ 29 Statement Of Comprehensive Income ..................................................... 30 Statement Of Cash Flows .................................................................... 31 Statement Of Changes In Equity ............................................................ 32 Notes To The Financial Statements ........................................................ 33 Number Of Shares Held ...................................................................... 55 Tenement Schedule ........................................................................... 57 Corporate Directory ........................................................................... 58 Joshua Project Chile Drilling at Canbelego, NSW Helix Resources Limited Annual Report 2011 1 Chairman’s Review Dear Shareholder I am pleased to present the 2011 Annual Report for the Company. Helix has had a very successful year of exploration, adding an inferred 100,000 oz gold resource to our NSW Projects, confirming the magnetite potential at our Olary Project in South Australia and commencing our first field season on our exciting projects in Chile; including drilling a copper mineralised porphyry system at the Joshua Project. Helix has continued with our business strategy of securing large advanced exploration acreage with a particular focus on two key commodities, gold and copper, and utilising leading edge exploration techniques under the guidance of a skilled Board and Management team to create shareholder wealth whilst managing risks. We have achieved geographical diversity through our operations in Chile and have secured six (6) Projects in which we hold 100%, and are actively seeking to acquire more advanced projects where we can use our exploration and commercial expertise to move the Projects further up the ‘value curve’. Our 1st drilling program at the Joshua Copper Project has confirmed excellent copper mineral prospectivity, and our Santiago office now comprises a team of 7. Shareholders who participated in the non-renounceable Option issue in July 2009 at $0.015 had the potential to realize their investment via ASX trading up to 11 cents in 4Q10. I am pleased that 98% of optionholders exercised them at $0.0508 before 31 May 2011 which raised $2.6M, which means we have ±$4M in liquid assets to continue to advance our Projects. I would like to thank the Board and Staff for their strong contributions in 2010/11 and ongoing commitment. I draw your attention to the Operational Report which discusses our Mineral assets in detail and encourage you to visit our website at www.helix.net.au for the latest information regarding our activities. I look forward to your attendance at the forthcoming Annual General Meeting. Yours faithfully Greg J Wheeler Executive Chairman Helix Resources Limited Annual Report 2011 2 COPPER & GOLD PROJECTS - NSW BACKGROUND: Helix has established a significant ground holding in Central NSW covering 1,500km² of tenements through joint ventures it controls and tenement acquisitions. The area has been targeted for its Cu and Au mineral prospectivity, excellent infrastructure [including nearby copper and gold processing plants, some with excess capacity]; and the presence of mining-focused companies in the district (Straits; Mincor; Glencore; YTC; OZ Minerals, Polymetals). Review of Operations Figure 1: Helix's NSW project location map RESTDOWN JV & MURIEL TANK JV PROJECTS EL 6140, EL6501 & EL6739:- Helix Resources 70%; Glencore International AG 30% The Projects are located 40km to 70 km SE of Cobar in Central Western NSW with the tenement package covering an area of ~278km² (Restdown JV Project 188km², Muriel Tank JV Project 90km²). RESTDOWN GOLD PROJECT The Restdown Project is located approximately 20 km SW of the historic Mt Boppy Gold Mine [produced ≈500,000 oz at +10g/t Au] now owned by Polymetals and 40 km to the NW is NewGold’s Peak Mine; while YTC’s Nymagee and Hera development projects are approximately 30 km S. Helix drilling on the Restdown JV has confirmed the presence of broad gold intersections associated with altered sediments within a regionally significant anticline. Results illustrate that gold is present at significant grade and widths in the area and gold mineralisation to date is not depth constrained and is open down dip. Helix Resources Limited Annual Report 2011 3 Sunrise Prospect The Sunrise Prospect is defined at a +10ppb Au in soils level as anomalous over a strike of +500m and up to 300m wide, which remains open in all directions. Better results from the two drilling programs to date included:- o 13m @ 4.2g/t Au HRRC006 o 18m @ 2.3 g/t Au & 4m @ 4.4g/t Au HRRC008 o 42m @ 1.5g/t Au (incl. 5m @ 3.3g/t, 6m @ 3g/t and 7m @ 2.7g/t) HRRC025 o 32m @ 1.0g/t Au (incl. 5m @ 5.4g/t) HRRC012 o 14m @ 2.0g/t (incl. 5m @ 4.0g/t) HRRC018 and formed the basis of the Inferred resource estimation of 2.6 Mt @ 1.2g/t Au for 100,000 oz Au. Details of the resource estimation parameters are outlined in the ASX release dated 17 August 2011. Figure 2: Interpreted cross section of mineralisation and lithology at Sunrise Prospect Good Friday Prospect Historical data identified the presence of gold mineralization at Good Friday with one RC drill hole recording 56m @ 11.7g/t Au from 5m including 23m @ 24g/t Au from 32m. Drilling has confirmed the system is mineralised over a strike of +200m, and open in all directions. The majority of gold results from the RC program are from within the oxide to transition zone. Weathering extends to a depth of 60-70m (the base of oxidation). Gold mineralisation is not depth constrained and may continue down dip. Extensions of these intersections will be tested in future programs. A review of the down-hole geology indicates that the gold mineralisation is hosted in sericite altered sandstones and siltstones, with higher grades correlating well with silica content. Helix Resources Limited Annual Report 2011 4 Regional Prospectivity The excellent results from drilling to date, the existence of historic workings scattered throughout the area; the aeromagnetic survey data and geochemical sampling program results provides confidence the project has the potential to host economic gold mineralisation elsewhere in the identified zone of interest which is +20km long by up to 9km wide (Figure 3). A series of criteria including lithological controls, interaction of structural directions, and multi- element geochemistry appears to provide the key to higher tenor of gold in the region and these criteria will be used to prioritise targets defined from this regional geochemical sampling for drilling. Figure 3: Significant regional prospectivity exists - Zone of interest with soil program on detailed aeromagnetics CANBELEGO PROJECT JV – NSW EL 6105:- Helix Resources Ltd 51%, moving to 70%, Straits Resources 49% Project Summary The Canbelego Project is located 45km SE of Cobar. Helix to date has defined an Initial inferred resource for the Canbelego Project at a 0.3% Cut off grade of 1.5 million tonnes at 1.2% Cu for 18,000t Contained Copper (refer ASX announcement 1st October 2010). Field work is concentrating on defining additional drill targets near the existing resource and in the region to improve technical and economic viability. FIVEWAYS PROSPECT - NSW At the 100% owned Fiveways Project, three RC holes were drilled (477m) in 2Q11 to test a series of discrete bulls-eye magnetic anomalies modelled from detailed magnetic surveys undertaken by Helix. Holes were assayed for gold and basemetals with samples collected at 4m intervals. Results returned were encouraging, with anomalous gold (up to 4m @ 0.4g/t Au) and elevated base metals over broad intercepts in the holes drilled. Helix Resources Limited Annual Report 2011 5 CHILE - COPPER AND GOLD PROJECTS Helix has identified Chile as a country with a low rate of ASX listed resource company participation, a suitable risk profile and excellent prospectivity for copper and gold, to add geographical diversification to our exploration and development portfolio. Helix has established a 100% owned Chilean subsidiary with an in-country general manager, an exploration manager, senior geologist and associated staff to progress its current Projects below and secure new Projects:- Joshua Copper Project • 100% owned exploration concession targeting Cu/Au porphyry systems. • • 1st RC drill program completed with better drill results:- Surrounds the Carmelita Mine which is artisanally mining ~2.5% Cu oxide material (Excised). o 243m @ 0.25% Cu to EOH, incl. 27m @ 0.51% Cu + 0.1g/t Au in ARJS11-005 from 0m o 177m @ 0.15%Cu, incl. 23m @ 0.21% Cu to EOH in ARJS11-004 from 57m o 156m @ 0.20% Cu + 0.1g/t Au in ARJS11-001 from 0m o 147m @ 0.22% Cu + 0.1g/t Au in ARJS11-002 • • Interpretation of assays, lithologies, alteration and geochemistry supports our Exploration target* of +400Mt for the Project; and the overall system may be much larger. IP survey and ground magnetics are underway to cover the 10km² main target zone. Figure 4 : Joshua Project location and geological map Helix Resources Limited Annual Report 2011 6 Talca Gold Project • 100% owned exploration concession adjacent and along strike to local gold mining operations covering 97km2 of gold prospective ground within the mining district of Punta De Talca (Region IV). The district has been only ever been artisanally mined, producing +800,000 oz gold since colonial times. • Opportunity to use modern exploration methods and drilling to assess scope for larger scale developments based on known gold exploited from high-grade quartz tension veins [average >5- 10g/t Au] bounded by parallel NW trending shears, traceable for 5-10km along strike. • Initial geochemistry and mapping has confirmed regional prospectivity with rock chips up to 15.2g/t Au. • Detailed ground magnetic survey completed to assist with defining structural targets to drill, with trenching expected to assist in defining targets in 4Q11. Pelusa Gold Project • 100% owned exploration concessions 15-25km NW of Talca Project • Area has same geological and structural setting to Talca and has artisanal mining along strike. • Adds regional upside, if potential for larger tonnage deposits in the Talca goldfield are defined. Loa Project • 100% owned exploration concession targeting Cu porphyry systems. Licence 23km2 situated ~40km west of the Chucquicamata Copper Mine and 40km along strike north of Spence Copper Mine in Region II. The exploration concessions, covering an area with variable shallow cover, were targeted for the possible interaction of major N-S lineaments with secondary NW and NE structures, crucial elements for porphyry emplacement in this region. The project is abutted by BHP, Vale and several local mid-cap mining companies. • Helix has been in ongoing discussions to source available geophysical platforms to undertake a detailed airborne aeromagnetic survey and an IP survey on the Project to define drill targets Drilling at Joshua Project, Chile Helix Resources Limited Annual Report 2011 7 OLARY PROJECT – SA Helix Resources Ltd 100% EL4022; EL3956 Summary • Results from 1st regional 11 hole RC drill program (1500m) testing the magnetite rich Braemar Iron Formation provides confidence a large iron ore system is present • Better drill results include:  124m @ 31.2% Fe from Surface to EOH in OLRC004  140m @ 29.8% Fe from 4m in OLRC005 • Potential access to the Broken Hill-Port Pirie railway network that transects the Helix tenements Background The Olary Region is an emerging iron ore province in the ENE of South Australia. A number of companies have reported encouraging drilling results from various prospects scattered in a belt south of the Barrier Highway from the township of Yunta to the New South Wales border and beyond (refer Figure 5). The iron occurrences are all associated with the folded and deformed Braemar Iron Formation. Helix has a strategic tenement holding in the area with significant exploration potential and direct access to infrastructure (Rail & Highway) in a region that is being considered as a new frontier for the development of magnetite iron ore. Helix is in the process of carrying out a series of metallurgical and petrological studies to gain a better understanding of the mineral attributes, possible recoveries and characteristics of the iron ore intersected as well as using the results from the drilling to model the detailed aeromagnetics and determine priority drill targets on the project. Figure 5: Olary Project location map with other Projects in the region Helix Resources Limited Annual Report 2011 8 Table 1: Olary Drilling information- Significant XRF Iron results from RC drilling (>4m @ 20%Fe) HOLE ID EAST (MGA-Zn54) NORTH (MGA-Zn54) RL(m) AZI (grid) DIP HOLE DEPTH(m) Depth From RESULT COMMENTS OLRC001 462500 6412370 248 20 -60 OLRC002 464000 6414000 231 0 -90 OLRC003 OLRC004 OLRC005 OLRC006 OLRC007 OLRC008 OLRC009 463720 463365 463152 462880 460205 461765 460170 6413490 248 6414230 247.5 6414373 6413800 6415765 6414995 256 247 255.5 275.5 6414420 254 180 0 180 350 210 210 185 -60 -90 -60 -60 -60 -60 -60 OLRC010 460950 6414290 249 0 -60 OLRC011 461400 6414000 256.5 0 -60 120 and 120 and 150 124 150 120 150 150 150 and Incl. 150 and Incl. 150 and 64m 96m 12m 12m @ 33.2% Fe 12m @ 33.2% Fe 8m @ 20.8% Fe 104m 16m @ 41.6% Fe to End of Hole 52m 36m @ 33.2% Fe 0m 4m 124m @ 31.2% Fe to End of Hole 140m @ 29.8% Fe 84m 24m @ 34.7% Fe 108m 20m @ 34.8% Fe - 0m 56m 88m 68m NSR Target not reached 20m @ 30.3% Fe 60m @ 23.4% Fe 24m @ 31.8% Fe 12m @ 31.5% Fe 104m 48m @26.0% Fe to End of Hole 116m 20m @ 31.2% Fe 16m 120 20m @ 20.6% Fe 12m @ 35.0% Fe Assays are 4m Spear samples, Samples were sent to Ultratrace Perth for crushing, splitting and fusion XRF analysis, reporting Fe as a percentage. Intercepts are reported from 4m composites with grades >15% Fe, no internal dilution to give total intercept results of >20% Fe. Total Drilled 1,534m Figure 6: Location of Maiden 11 hole RC Program on detailed first vertical derivative magnetics - magnetic highs represent Braemar Formation targets for future drill testing Helix Resources Limited Annual Report 2011 9 YALLEEN IRON ORE JOINT VENTURE – WESTERN AUSTRALIA Helix Resources Limited (30%), API (AMCI/Aquila) (70%) iron ore rights E47/1169-1171 Helix Resources Limited 100% other minerals Summary • JORC Resource based on drilling during 2007/8 currently stands at 84.3Mt @ 57.2% Fe Channel Iron(refer to appended resources table) • Helix prepared Scoping Study in August 2010 reported technical and financial viability for Yalleen Iron Ore Project [refer 17 August 2010 ASX release detailing assumptions and Disclaimer] • Scoping study indicated nearby potential infrastructure solutions for transporting Yalleen sourced product to port. • API provided 1Q11 certain information regarding development options but not in a Scoping Study format. Whilst Helix awaits further information from API to determine the impact on their Scoping Study released August 2010, preliminary comments emerging from the API studies include:-  A conceptual level mine plan at 8Mtpa ore production rate indicates a potential recoverable resource of 61Mt at an ore strip ratio of 2.65:1  A potential product specification comparable to the API’s West Pilbara Fines target grades  Yalleen ore has the potential to be beneficiated by washing to reduce impurities and improve grade  Preferred ore transport options: private heavy haul road [capable of handling 510T trucks] or light rail option to API Stage 1 rail link 75kms W or heavy haul rail to Robe River rail link 12 kms N • Recent Fe price modeling by API, together with other Pilbara studies in the marketplace, has led Helix to use a LOM average ‘real’ price of $79/t • Infrastructure access charge discussions have commenced Helix awaits release of the WPIOP Stage 1 DFS together with Project Development Approval and Funding updates to determine the impact on the Yalleen JV. LAKE EVERARD (INCL. TUNKILLIA) PROJECT – SOUTH AUSTRALIA Helix Resources Limited 46%, Minotaur Exploration Limited 54% EL 3403, ELA2006/389 and EL 3335 [excluding uranium rights] GOLD Project Summary  Resource inventory of 803,000oz Au and 1,658,000oz Ag (*Refer appended resource table);  Minotaur continues to sole fund their proposed work programs whilst Helix dilute. Minotaur has to sole fund a further $10M from their initial 51% equity position to dilute Helix to ±24%; Background Helix discovered the deposit in the mid 1990’s while exploring for gold under cover in the Gawler Craton of South Australia. The Tunkillia discovery, which was announced in late 1996, was one of the first gold discoveries in the Gawler Craton and the 20 km² Tunkillia Prospect remains the largest robust gold-in-calcrete anomaly in the region. Subsequent exploration (1998-2002) was carried out in joint venture, initially with Acacia Resources Limited and later with AngloGold Limited following its takeover of Acacia. Helix Resources Limited Annual Report 2011 10 Since the Project became the subject of an Earn-In & Joint Venture in 2005, Minotaur have spent +$6M carrying out additional drilling at Area 223 and several exploration campaigns using geophysics, geochemistry and drilling. In August 2009, Minotaur released an updated combined measured, indicated and inferred estimate inventory of 803,000oz Au and 1,658,000oz Ag within the Area 223 deposit. Minotaur advise they continue to complete regional drilling and further geotechnical, structural and metallurgical testing together with economic studies on the Project. Geology The Gawler Craton is broadly divided into three main geological units, Archaean crystalline basement, highly deformed Palaeoproterozoic metasediments and granites, and less deformed Mesoproterozoic volcanics, clastic sediments and granite. Almost all gold and copper mineralisation found in the Gawler Craton is directly associated with Mesoproterozoic magmatism. The host rocks to the Tunkillia prospect are medium- to coarse-grained granitoids of the Tunkillia Suite that have been intensely sheared and brecciated within the Yarlbrinda Shear Zone. zones In a regional context, the Tunkillia area shows evidence of extensive alteration. Large demagnetisation of (alteration of primary magnetite to ilmenite) are observed in aeromagnetic images, from which Helix defined a western and eastern demagnetised zone within the northern Yarlbrinda Shear Zone. Area 223 is located within the western demagnetised zone along which large volumes of fluid were focused, particularly along the margins of the shear zone producing the gold deposit and alteration. the prospect At gold mineralisation at Tunkillia is associated with zones of intense sericite alteration, and quartz and sulphide veining. scale, Figure 7: Location of Tunkillia Gold Project * Note: The term Exploration Target should not be misinterpreted as an estimate of Mineral Resources or Ore Reserves. Whilst the company remains optimistic that it will be in a position to report resources in the future, any discussion in relation to targets, resources, reserves or ‘ore’ is only conceptual in nature as there is insufficient drilling or analysis to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. Helix Resources Limited Annual Report 2011 11  Helix Project Locations Helix Resources Limited Annual Report 2011 12 Resources Commodity Iron Ore Category Indicated Inferred Project Yalleen JV, WA Interest 30% (Contributing) Resource 47.9Mt @ 57.3% Fe (Channel Iron) 36.4Mt @ 57.1% Fe (Channel Iron) Joint ventured with API Management Pty Ltd (50% Aquila Resources, 50% AMCI) and forms part of their West Pilbara Iron Ore Project which comprises multiple JV’s. Helix prepared Scoping Study in August 2010 reports technical and financial viability. Copper Inferred Canbelego JV, NSW 51% (Moving to 70%) (Managing) 1.5Mt @ 1.2% Cu for 18,000t Contained Cu (at 0.3% Cu Cut-off) Joint venture with Straits Resources Gold Oxide Measured Indicated Inferred Primary Indicated Inferred Inferred Total Tunkillia JV, SA (Diluting) 46% 1.2Mt @ 1.8 g/t – 66,000 oz 2Mt @ 1.3 g/t – 86,000 oz 2.5 Mt @ 1g/t – 77,000 oz 4.2Mt @ 2 g/t – 270,000 oz 4.4Mt @ 2.1 g/t – 300,000 oz 8.6Mt @ 5.7 g/t – 1.6M oz Silver 0.8M oz Au and 1.6M oz Ag Minotaur Exploration Ltd has earned ±54% and as JV Manager continue to assess economic and technical viability of the Project, as well as exploration upside. Whilst Helix has the option to contribute at any time, Minotaur will need to expend an additional $10 million from their original spend of $5M for 51% to dilute Helix from the initial 49% interest to 24%. Gold Inferred Restdown JV, NSW 70% (Managing) 2.6Mt @ 1.2g/t Au for 100,000oz gold (at 0.3g/t Au Cut-off) Joint Venture with Glencore AG Details of the assumptions underlying the above estimations are contained in previous ASX releases or at www.helix.net.au Competent Persons Statements The information in this announcement that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr M Wilson who is a full time employee of Helix Resources Limited and a Member of The Australasian Institute of Mining and Metallurgy. Mr M Wilson has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr M Wilson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Helix Resources Limited Annual Report 2011 13 CORPORATE GOVERNANCE The directors of Helix Resources Limited believe that effective corporate governance improves company performance, enhances corporate social responsibility and benefits all stakeholders. Governance practices are not a static set of principles and the company assesses its governance practices on an ongoing basis. Changes and improvements are made in a substance over form manner, which appropriately reflect the changing circumstances of the company as it grows and evolves. Accordingly, the Board has established a number of practices and policies to ensure that these intentions are met and that all shareholders are fully informed about the affairs of the Company. The Company has a corporate governance section on the website at www.helix.net.au. The section includes details on the company’s governance arrangements and copies of relevant policies and charters. ASX Corporate Governance Council Best Practice Principles and Recommendations (2nd Edition) For ease of comparison to the recommendations, the Corporate Governance statement addresses each of the 8 principles in turn. Where the company has not followed a recommendation this is identified with the reasons for not following the recommendation. This disclosure is in accordance with ASX listing rule 4.10.3. The following table outlines which of the ASX recommendations the Company has not complied with. Reasons for non-compliance are explained in this report. ASX Recommendation Description 2.1 2.2 2.3 2.4 4.1 4.2 8.1 A majority of the board should be independent directors The chair should be an independent director The roles of chair and chief executive officer should not be exercised by the same individual The board should establish a separate nomination committee The board should establish a separate audit committee The audit committee should be structured so that it: • consists only of non-executive directors • consists of a majority of independent directors • is chaired by an independent director, who is not chair of the board • has at least 3 members The board should establish a separate remuneration committee PRINCIPLE 1 - LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT BY THE BOARD The board operates in accordance with broad principles set out in its charter which is available from the corporate governance section of the company’s website. The directors formally adopted the board charter in August 2006. Broadly the key responsibilities of the board are: 1. Setting the strategic direction of the company with management and monitoring management implementation of that strategy; 2. Evaluating, approving and monitoring major capital expenditure, capital management and all major corporate transactions; 3. Approving the annual operating budget, annual shareholders report and annual financial accounts; 4. Appointing, monitoring, managing the performance of, and if necessary terminating the employment of the Chief Executive Officer; 5. Approving and monitoring the company’s risk management framework; 6. Ensuring compliance with the Corporations Act 2001, ASX listing rules and other relevant regulations. All directors and key executives reporting to the CEO of the company have been given formal letters of appointment outlining key terms and conditions of their appointment. Performance evaluations for senior executives are carried out annually by either the Chief Executive Officer or the Technical Director. Performance during the previous 12 months is assessed against relevant performance indicators, and role expectations and goals are set for the following year. Performance evaluations have been completed for all executives during the reporting period in accordance with approved processes. Helix Resources Limited Annual Report 2011 14 PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE Board Members Details of board members, their experience, expertise, qualifications, term in office and independence status are set-out in the Directors’ Report. The structure of the board does not comply with ASX recommendation 2.1 in that a majority of the directors are not independent. Currently the board consists of four directors of which Mr Gordon Dunbar and Mr John den Dryver are considered independent within the ASX’s definition. The board charter is available from the company’s website. The Company does not comply with ASX recommendations 2.2 and 2.3 in that the Chairman is not an independent director, and the roles of Chairman and Chief Executive Officer are performed by the same person. The board believes the current structure is appropriate at this stage of the company’s activities. The board has formalised various policies on securities trading, disclosure and codes of conduct, which assist in providing a stronger governance framework for the Company. These of course are in addition to the Company’s requirements under the Corporations Act 2001 and ASX Listing Rules. Board structure and composition will be reviewed as and when the company’s strategic directions and activities change. The Company will only recommend the appointment of additional Directors to your board where it believes the expertise and value added outweighs the additional cost. During the year no new directors were appointed to the Helix board. A copy of the Director Nomination and Induction Policy is available from the corporate governance section of the company’s website. Nomination Committee The company does not comply with ASX recommendation 2.4 in that there is no separate nomination committee. Given the board comprises four directors it has been decided that there are no efficiencies to be gained from forming a separate nomination committee. The current board members carry out the roles that would otherwise be undertaken by a nomination committee and each director excludes himself from matters in which he has a personal interest. Each Director completes an annual formal evaluation of the Board’s performance including the Chief Executive Officer and Technical Director. The Chairman conducts an informal evaluation of the board members at least once per annum. Further information on the performance assessment process for the board and senior executives can be found in the Directors’ Report. Details of director’s attendance at board, audit committee and remuneration committee meetings are detailed in the Directors’ Report. A copy of the Nomination Committee Charter is available from the corporate governance section of the company’s website. Independent Advice A director of the Company is entitled to seek independent professional advice (including but not limited to legal, accounting and financial advice) at the Company’s expense on any matter connected with the discharge of his or her responsibilities, in accordance with the procedures and subject to the conditions set out in the board’s charter. PRINCIPLE 3 – PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING Code of Conduct The board adopted a code of business conduct in August 2006. The code has formalised policies and practices that were in place prior to formal adoption of the code by the company. A copy of the code is made available to all employees of the company. This code expresses certain basic principles that the Company and employees should follow in all dealings related to the Company. They should show the highest business integrity in their dealings with others, including preserving the confidentiality of other peoples’ information and should conduct the Company’s business in accordance with law and principles of good business practice. A copy of the code of conduct is available from the corporate governance section of the company’s website. Securities Trading Policy A formal Securities Trading Policy has been in place since August 2006. Prior to this date there was an understanding among executives of when it was appropriate to trade in the Company’s securities. The policy which has now been adopted has been strengthened, as certain key executives (“Restricted Persons”) are prevented from trading in the company’s shares 2 weeks prior to the announcement of quarterly, half-year and the full-year reports. This is a restriction over and above the requirement to not trade in the Company’s securities when in possession of inside information. A copy of the Securities Trading Policy is available from the corporate governance section of the company’s website. Helix Resources Limited Annual Report 2011 15 PRINCIPLE 4 – SAFEGUARD INTEGRITY IN FINANCIAL REPORTING The Chief Executive Officer and Chief Financial Officer have made the following certifications to the board; • That the company’s financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the group and are in accordance with relevant accounting standards; • That the reports were founded on a sound system of financial risk management and internal compliance and control. Audit Committee The company does not comply with ASX recommendations 4.1 and 4.2 in that there is no separate audit committee, and it is not comprised only of non-executive Directors. Given the board comprises four directors it has been decided that there are no efficiencies to be gained from forming a separate audit committee. The current board members carry out the roles that would otherwise be undertaken by an audit committee. The board adopted a formal audit charter in August 2006. Prior to this date the audit committee carried out many of the roles and responsibilities outlined in the charter. The charter sets out the roles and responsibilities of the audit committee and contains information on the procedures for the selection and rotation of the external auditor. A full copy of the Audit Committee Charter is available from the corporate governance section of the Company’s website. The board believes the audit committee structure is appropriate given the company’s size. The composition of the audit committee will be assessed on an ongoing basis in light of the company’s overall board structure and strategic direction. PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE Continuous Disclosure The board adopted a formal disclosure policy outlining procedures for compliance with ASX continuous disclosure requirements in August 2006. Informal procedures were in place prior to this time and these have been formulated and strengthened into the written policy. The policy is based upon the Company’s desire to promote fair markets, honest management and full and fair disclosure. The disclosure requirements must be complied with in accordance with their spirit, intention and purpose. The purpose of the policy is to: • summarise the Company’s disclosure obligations; • explain what type of information needs to be disclosed; • identify who is responsible for disclosure; and • explain how individuals at the Company can contribute. The Company Secretary is responsible for ensuring disclosure of information to the ASX. A copy of the Disclosure Policy is available from the corporate governance section of the company’s website. PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS Shareholder Communication Strategy The board adopted a formal shareholder communication guidelines policy in August 2006. The policy formalises many of the practices that were in place already but has also resulted in some additional information being made available on the website. All information disclosed to the ASX is posted on the company’s website as soon as it is disclosed to the ASX. When analysts are briefed on aspects of the group’s operations, the material used in the presentation is released to the ASX and posted on the company’s website. Procedures are in place to determine where price sensitive information has been inadvertently disclosed, and if so, this information is released to the ASX. The company’s website underwent a significant overhaul in 2006 and again in 2008 to make it more user friendly and informative for shareholders and other visitors to the site. The website continues to be updated and refined as appropriate. The external auditor attends the annual general meeting and is available to respond to questions about the conduct of the audit and content of the independent audit report. A full copy of the shareholder communication policy is available from the corporate governance section of the company’s website. Helix Resources Limited Annual Report 2011 16 PRINCIPLE 7 – RECOGNISE AND MANAGE RISK Risk assessment and management The company does not have a separate Risk Management committee. Given the current size of the company and board, the directors believe there are no efficiencies in forming a separate committee and the board as a whole performs this role. The company does not have a single specific risk management policy, but rather, financial and operating risks are addressed through individual approved policies and procedures covering financial, contract management, safety and environmental activities of the company. In addition to financial audits, the company’s operations in Australia are subjected to annual Risk Management reviews in accordance with Risk Management Standard AS/NZS ISO 31000:2009. The company engages an insurance broking firm as part of the company’s annual assessment of the coverage for insured assets and risks. The results of all the various reviews and insurances are reported to the board at least annually. The integrity of Helix’s financial reporting relies upon a sound system of risk management and control. Accordingly, the Chief Executive Officer and Chief Financial Officer, to ensure management accountability, are required to provide a statement in writing to the board that the financial reports of Helix are based upon a sound risk management policy. The board believes that it has a thorough understanding of the Company’s key risks and is managing them appropriately. A copy of the company’s risk management committee charter is available from the corporate governance section of the company’s website. PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY Remuneration committee The Company does not comply with ASX recommendation 8.1 in that it has not established a separate remuneration committee. Given the current size of the company and board, the directors believe there are no efficiencies in forming a separate committee and the board as a whole performs this role. The board of directors reviews and approves recommendations in terms of compensation and incentive plan arrangements for directors and senior executives, having regard to market conditions and the performance of individuals and the consolidated entity. Remuneration Policies The Company’s remuneration policies are detailed in the Remuneration report in the Directors’ Report. Non-Executive Director Remuneration Non-executive directors are remunerated by way of director’s fees. Apart from compulsory superannuation entitlements, non-executive directors are not eligible to receive retirement benefits. A copy of the Remuneration Policy is available from the corporate governance section of the company’s website. Helix Management and Chile staff, Chile, August 2011 Helix Resources Limited Annual Report 2011 17 DIRECTORS’ REPORT In respect of the financial year ended 30 June 2011, the Directors of Helix Resources Limited, (the parent entity), submit the financial report. In order to comply with the provisions of the Corporations Act 2001, the Director’s report as follows: DIRECTORS The following persons held office as Directors of Helix Resources Limited during or since the end of the financial year and up to the date of this report: Greg J Wheeler BCom; FCA; SF Fin; GAICD Executive Chairman; Managing Director and Chief Financial Officer – 14th July 2006 to present Non-Executive Director – 25 October 2004 to 14th July 2006 Mr Wheeler is a Fellow of the Institute of Chartered Accountants in Australia and the Financial Services Institute of Australasia, and has operated in many of the major accounting practices for the past 25 years in Australia and overseas. Greg was a Partner at the Chartered Accounting practices of Grant Thornton [1990 to 1999] and Deloitte Touche Tohmatsu [1999 to 2002], before establishing his own consulting firm in 2002. His skills include:- company and business valuations, advice to directors/shareholders; shareholder wealth strategies, capital raisings and broker presentations, acquisitions and divestitures, corporate governance; commercial negotiations and risk assessment and mitigation. Michael Wilson B Ec; B Sc (Hons); MAusIMM Executive Technical Director - 1st June 2007 to present Mr Wilson has been with the company for thirteen years and has played major roles at Tunkillia on the Gawler Craton, South Australia and in the exploration for gold, platinum group metals and base metals in the Proterozoic Terranes of New South Wales and South Australia, and the Proterozoic and Archaean Terranes in Western Australia. Michael’s experience includes project management; mineral exploration using geology, geochemistry, geophysics and drilling; ore resource drilling, ore resource estimation and evaluation programs; and monitoring joint venture projects. Michael leads our team of experienced geologists and technical staff and is also completing his Masters of Business Administration and Masters of Mineral Economics part-time at Curtin University. John den Dryver BE (Mining) MSc FAusIMM (CP) Non-Executive Director - Appointed 25 October 2004 Mr den Dryver is a mining engineer with some 30 years mining experience in operational and corporate management. John joined Mount Isa Mines in 1973. In 1982, John joined North Flinders Mines as the Company Mining Engineer. He became the Operations Manager for North Flinders after the mine was commissioned in 1986 and over the next 10 years managed the operations as well as developing the further discoveries in this region including the Callie Mine. In 1987 he was invited to join the Board of North Flinders to become Executive Director- Operations. In 1997 after Normandy Mining took over North Flinders, John was appointed Executive General Manager-Technical leading a team of specialist geologists, mining engineers and metallurgists in operational support, technical review and due-diligence activities. In 2003, after the takeover of Normandy by Newmont Corporation, John set up his own mining consultancy business. Gordon Dunbar BSc (Hons), MSc, FAusIMM, FAIG Non-Executive Director - Appointed 18 July 2006 Mr Dunbar is a consulting geologist with 40 years experience in the Australian minerals industry managing project development, mineral exploration and evaluation programmes, mine geology, financial studies, production assessment and monitoring joint venture projects. Gordon’s experience includes exploration and mining geology roles at Kambalda with WMC, the evaluation of the Golden Grove base metal deposit in WA, the Chief Geologist at Rosebery Mine in Tasmania and management roles with BP Australia undertaking financial studies, monitoring the evaluation of the Olympic Dam deposit and as Exploration manager for BP Minerals. Gordon formed his own consulting group in 1990 to provide advice on exploration, evaluation, mining geology, project assessment and pre- feasibility studies, particularly those involving gold, base metals and nickel. He has worked on projects within Australia and Internationally. DIRECTORSHIPS OF OTHER LISTED COMPANIES Directorships of other listed companies held by directors in the 3 years immediately before the end of the financial year are as follows: Name John den Dryver Gordon Dunbar Company Adelaide Resources Limited Gascoyne Resources Limited Centrex Metals Limited Gascoyne Resources Limited Rubianna Resources Limited Period of directorship 18 April 2005 – current 5 October 2009 – current 1 March 2011 – current 5 October 2009 – current 13 September 2011 - current JOINT COMPANY SECRETARIES Greg J Wheeler Joneen McNamara Mr Wheeler is a Chartered Accountant with over 25 years experience in accounting, company secretarial and corporate management. Mrs McNamara is an Accountant and has completed Chartered Secretaries Australia’s Graduate Diploma in Applied Corporate Governance. She is a member of the Institute of Chartered Secretaries and Administrators. Helix Resources Limited Annual Report 2011 18 PRINCIPAL ACTIVITIES The principal activity of the Group constituted by Helix Resources Limited and the entities it controlled during the year consisted of gold, iron ore and base metal mineral exploration. There has been no significant change in the nature of these activities during the year. FINANCIAL RESULTS The net consolidated loss of the Group for the financial period, after provision for income tax was $708,373 (2010: $6,885,378). DIVIDENDS No dividend has been paid since the end of the previous financial year and no dividend is recommended for the current period. REVIEW OF OPERATIONS The Consolidated entity’s activities are contained in releases to the ASX on a quarterly basis, discussed in a separate section of this Annual Report as well as on our website at www.helix.net.au. The Company’s strategy continues to focus on prospective gold and copper regions and utilising our corporate and geological expertise to create and extract value for the benefit of our shareholders. Mineral Asset Project Highlights include:- Gold Restdown Gold Project - NSW - [Helix 70%; Isokind Pty Ltd 30%] • 1st pass drilling 4Q10 provided ‘significant’ Au intercepts leading to a 6,000m RC program being completed 2Q11 and a maiden Resource of 2.6Mt @ 1.2g/t Au for 100,000 oz gold. Preliminary assessment of economic and technical viability factors has commenced, with additional RC drilling planned 2H11 to increase the Resource, subject to approvals and drill rig availability, as well as test regional targets in the identified 9km by 20km zone of interest. • Muriel Tank Project - NSW- [Helix 70%; Isokind Pty Ltd 30%] • Rockchip samples to 33 g/t Au and aeromagnetic survey results confirm extensive drill targets and prospectivity. RC drilling scheduled for 2H11 subject to approvals and drill rig availability. Non-Managed JV - Tunkillia Gold Project - SA • JV participant and manager Minotaur Exploration continue to fund expenditure whilst Helix dilute from their 46% interest. The project has an existing Resource at Area 223 – comprising a total of 800,000oz Au and 1,600,000oz Ag; and numerous exploration targets to increase the regional size of the Resource. Copper Joshua Copper Project - Chile • Initial 1200m RC drilling program at the priority 1 target confirms copper mineralisation prospectivity. Results including 243m @ 0.25% Cu +0.1g/t Au and 157m @ 0.2% Cu +0.1g/t Au confirm the potential for an Exploration Target* of +400Mt at this prospect IP and ground magnetic survey completed and interpretation underway, with diamond drill program scheduled for 4Q11 subject to approvals and drill rig availability. • Canbelego Copper Project- NSW - [Helix 51% and earning 70%; Straits Resources 49% diluting] • Initial Inferred Resource of 1.5Mt @ 1.2% Cu established 3Q10 and regional geochemical work and drilling to identify additional resources continues during 2H11. Iron Ore Non Managed JV - Yalleen Project - WA [API (Aquila/AMCI) 70% / Helix 30%] • • • Resource estimate of 84.3 Mt @ 57.2% Fe for Kumina Creek and Robe Exit Helix prepared Scoping study August 2010 confirmed technical and economic viability API development study work continues Olary Magnetite Project – SA • RC drill program confirms potential for a large scale Fe system as evidenced by drilling results including 140m @ 29.8% Fe and 124m @ 31.2% Fe. Corporate The Group reported a loss of $708,373 during the year after impairment of $127,805 of carried forward exploration costs. A placement at $0.11 occurred in November 2010 to raise $2.3M before costs, with an additional $2.7M raised in May 2011 via the exercise of 54M options at $0.0508 which were originally issued to shareholders at $0.015 in 2H09. SIGNIFICANT CHANGES IN STATE OF AFFAIRS In the opinion of the Directors, other than disclosed elsewhere in this Report, there were no significant changes in the state of affairs of the Group that occurred during the period under review. Helix Resources Limited Annual Report 2011 19 SUBSEQUENT EVENTS There has not been any matter or circumstance, other than referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs on the Group in future financial years. FUTURE DEVELOPMENTS Disclosure of information regarding likely developments in the operations of the Group in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Group. Accordingly, this information has not been disclosed in this report. REMUNERATION REPORT [AUDITED] The Company’s Executive Officers’ remuneration policy is set to ensure that remuneration packages properly reflect the duties and responsibilities of the senior executives and are sufficient to attract, retain and motivate personnel of the requisite quality. The policy is administered by the Remuneration Committee, which is comprised of all board members. The Executive Officers of the Company are employed under Service Agreements which are identical in their contents and only differ in remuneration levels. They have durations of twenty four months currently expiring June 2013 and renew automatically unless terminated by either the Company by giving a minimum of twelve months notice to the individual; or by the individual by giving six months notice to the Company. Whilst the level of remuneration is not dependent on the satisfaction of any performance condition, the performance of Executives is reviewed on an annual basis against a number of qualitative and quantitative factors. Non-executive Directors are remunerated by fees determined by the Board within the aggregate Directors’ fee pool limit of $150,000 approved by shareholders in April 1996. The pool limit is not at present fully utilised. In setting the fees, account is taken of the responsibilities inherent in the stewardship of the Company and the demands made of Directors in the discharge of their responsibilities. Advice is taken from independent sources where appropriate to ensure remuneration accords with market practice. The company has largely adopted the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations and decided to remunerate its non-executive directors on an ongoing basis with no accrual or entitlement to a retirement benefit. Remuneration packages contain the following key elements: a) Primary benefits – salary / fees and performance based bonuses; b) Equity – share options granted under the executive share option plan as disclosed in note 17 to the financial statements. The following table discloses the remuneration of the directors and executives of the company: Salary & Fees $ Primary Perfor- mance Based Payment* $ Post Employment Equity Non Monetary Super- annuation Pre- scribed Benefits $ $ $ Other Retire- ment Benefits $ Options % of Remu- neration Other Benefits Total $ % $ $ 2011 Key Management Personnel G J Wheeler 297,592 M H Wilson 247,300** 73,395 50,459 J den Dryver 40,000 G Dunbar J McNamara 40,000 79,117 - - 11,010 - - - - - 33,388 22,921 - - 8,111 - - - - - - - - - - - - - - - - - - - - - - - - - 704,009 Total Key Management Personnel *The bonus paid in April 2011 was to recognise the voluntary reduction by staff in salaries by ±25% during 2009/10 and ±15% during 2010/11 to recognise the GFC and to conserve cash. **During 2011 the Long Service Leave entitlement of MH Wilson was paid out [$48,000] 134,864* 64,420 - - - - - - Field Mapping at Muriel Tank, NSW Helix Resources Limited Annual Report 2011 404,375 320,680 40,000 40,000 98,238 903,293 20 Salary & Fees $ Primary Perfor- mance Based Payment $ Post Employment Equity Non Monetary Super- annuation Pre- scribed Benefits $ $ $ Other Retire- ment Benefits $ Options % of Remu- neration Other Benefits Total $ % $ $ 2010 Key Management Personnel G J Wheeler 262,040 M H Wilson 169,324 J den Dryver 40,000 G Dunbar J McNamara Total Key Management Personnel 40,000 50,330 561,694 - - - - - - - - - - - - 23,584 15,239 - - 4,529 43,352 - - - - - - - - - - - - - - - - - - - - - - - - 285,624 184,563 40,000 40,000 54,859 605,046 KEY MANAGEMENT PERSONNELS’ SHARE OPTIONS Pursuant to approval at Shareholders’ meetings, executives and employees are entitled to subscribe for ordinary shares on the terms agreed to by the Shareholders. At the date of this report current directors and executives are entitled to purchase an aggregate of 15,500,000 ordinary shares of Helix Resources Limited according to the following terms: Key Management Personnel Number of Executive Options Held Issuing Entity Exercise Price Expiry Date Number of ordinary shares under option G J Wheeler M H Wilson J den Dryver G Dunbar J McNamara Total 8,000,000 Helix Resources Limited 5,000,000 Helix Resources Limited 1,000,000 Helix Resources Limited 1,000,000 Helix Resources Limited 500,000 Helix Resources Limited 15,500,000 $0.525 $0.525 $0.525 $0.525 $0.525 31.10.2011 31.10.2011 31.10.2011 31.10.2011 31.10.2011 8,000,000 5,000,000 1,000,000 1,000,000 500,000 15,500,000 DIRECTORS’ SHARE AND OPTION HOLDINGS Director G J Wheeler M H Wilson J den Dryver G Dunbar *Fully Paid Ordinary Shares *Staff Options 16,873,259 2,349,700 600,000 1,050,000 8,000,000 5,000,000 1,000,000 1,000,000 * Directors’ interests in ordinary shares and options of the parent entity are shown at the date of this Directors’ Report. Helix Resources Limited Annual Report 2011 21 OFFICERS’ INDEMNITY AND INSURANCE During the year the Company paid an insurance premium to insure the Directors and Officers of the Company and related bodies corporate. The Officers of the Company covered by the insurance policy include the Directors named in this report. The Directors’ and Officers’ Liability insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the officers in their capacity as officers of the Company or a related body corporate. The insurance policy does not contain details of the premium paid in respect of individual officers of the Company. Disclosure of the nature of the liability cover and the amount of the premium is subject to a confidentiality clause under the insurance policy. The Company has entered into an agreement with the Directors and Officers to indemnify them against any claim and related expenses, which arise as a result of work completed in their respective capacities. The Company has not otherwise, during or since the financial year indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor. ENVIRONMENTAL REGULATIONS The Group is subject to environmental regulations under laws of the Commonwealth and State. The Group has a policy of complying with its environmental performance obligations and at the date of this report, is not aware of any breach of such regulations. MEETINGS OF DIRECTORS The number of meetings held during the year by Company Directors (including meetings of committees of Directors) and the number of those meetings attended by each Director was: Board of Directors’ Meetings Remuneration Committee Meetings Audit Committee Meetings Held Attended Held Attended Held Attended 3 3 3 3 3 3 3 3 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 G J Wheeler M H Wilson J den Dryver G Dunbar NON-AUDIT SERVICES The auditors did not provide any non-audit services during the financial year. AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration is included on page 24 of the financial report. Dated at Perth this 15th day of September 2011. This report is made and signed in accordance with a resolution of Directors made pursuant to s.298(2) of the Corporations Act 2001. On behalf of the Directors. Greg J Wheeler Executive Chairman Helix Resources Limited Annual Report 2011 22 Competent Persons Statements The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves on all Helix projects is based on information compiled by Mr M Wilson who is a full time employee of Helix Resources Limited and a Member of The Australasian Institute of Mining and Metallurgy. Mr M Wilson has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr M Wilson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. * Note: Exploration Target should not be misinterpreted as an estimate of Mineral Resources or Ore Reserves. Whilst the company remains optimistic that it will be in a position to report resources in the future, any discussion in relation to targets, resources, reserves or ‘ore’ is only conceptual in nature as there is insufficient drilling or analysis to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource Helix Resources Limited Annual Report 2011 23 AUDITOR’S INDEPENDENCE DECLARATION Grant Thornton Audit Pty Ltd ABN 94 269 609 023 10 Kings Park Road West Perth WA 6005 PO Box 570 West Perth WA 6872 T +61 8 9480 2000 F +61 8 9322 7787 E admin.wa@au.gt.com W www.grantthornton.com.au Auditor’s Independence Declaration To the Directors of Helix Resources Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Helix Resources Limited for the year ended 30 June 2011, I declare that, to the best of my knowledge and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b no contraventions of any applicable code of professional conduct in relation to the audit. GRANT THORNTON AUDIT PTY LTD Chartered Accountants C A Becker Director - Audit & Assurance Perth, 15 September 2011 Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia. Liability limited by a scheme approved under Professional Standards Legislation Helix Resources Limited Annual Report 2011 24 INDEPENDENT AUDIT REPORT Grant Thornton Audit Pty Ltd ABN 94 269 609 023 10 Kings Park Road West Perth WA 6005 PO Box 570 West Perth WA 6872 T +61 8 9480 2000 F +61 8 9322 7787 E admin.wa@au.gt.com W www.grantthornton.com.au Independent Auditor’s Report To the Members of Helix Resources Limited Report on the financial report We have audited the accompanying financial report of Helix Resources Limited (the ‘Company’), which comprises the consolidated statement of financial position as at 30 June 2011, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes to the financial report and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ responsibility for the financial report The Directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that are free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards. Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards which require us to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia. Liability limited by a scheme approved under Professional Standards Legislation Helix Resources Limited Annual Report 2011 25 INDEPENDENT AUDIT REPORT An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s opinion In our opinion: a the financial report of Helix Resources Limited is in accordance with the Corporations Act 2001, including: i ii giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001; and b the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements. Report on the remuneration report We have audited the remuneration report included in pages 20 to 21 of the directors’ report for the year ended 30 June 2011. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia. Liability limited by a scheme approved under Professional Standards Legislation Helix Resources Limited Annual Report 2011 26 INDEPENDENT AUDIT REPORT Auditor’s opinion on the remuneration report In our opinion, the remuneration report of Helix Resources Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001. GRANT THORNTON AUDIT PTY LTD Chartered Accountants C A Becker Director - Audit & Assurance Perth, 15 September 2011 Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia. Liability limited by a scheme approved under Professional Standards Legislation Helix Resources Limited Annual Report 2011 27 DIRECTORS’ DECLARATION The Directors of the company declare that: 1. the financial statements and notes, as set out on pages 29 to 54 are in accordance with the Corporations Act 2001 and:- a. b. comply with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and give a true and fair view of the financial position as at 30 June 2011 and of the performance for the year ended on that date of the group; and c. complies with International Financial Reporting Standards as disclosed in Note 1. 2. the Chief Executive Officer and Chief Finance Officer have each declared that:- a. b. c. the financial records of the company for the financial year have been properly maintained in accordance with s 286 of the Corporations Act 2001; the financial statements and notes for the financial year comply with the Accounting Standards; and the financial statements and notes for the financial year give a true and fair view; 3. In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; This declaration is made in accordance with a resolution of the Board of Directors. On behalf of the Directors Greg J Wheeler Executive Chairman Signed at Perth this 15th day of September 2011. Helix Resources Limited Annual Report 2011 28 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011 Note 2 3 4 6 7 5 8 9 9 10 11 12 Current Assets Cash and Cash Equivalents Trade and Other Receivables Other Financial Assets Total Current Assets Non-Current Assets Property, Plant & Equipment Exploration and Evaluation Other Financial Assets Total Non-Current Assets Total Assets Current Liabilities Trade and Other Payables Short Term Provisions Total Current Liabilities Non- Current Liabilities Other Long Term Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Share Capital Reserves Accumulated Losses Total Equity CONSOLIDATED 2011 $ 2010 $ 4,284,040 3,577,835 160,969 137,946 3,600 57,860 4,448,609 3,773,641 94,225 99,856 9,747,315 6,149,147 1,064,000 426,000 10,905,540 6,675,003 15,354,149 10,448,644 343,842 107,119 450,961 65,845 65,845 135,035 122,541 257,576 24,469 24,469 516,806 282,045 14,837,343 10,166,599 59,145,439 53,571,624 825,600 1,037,930 (45,133,696) (44,442,955) 14,837,343 10,166,599 Notes to the financial statements are included on pages 33 to 54 Helix Resources Limited Annual Report 2011 29 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 Revenue from Continuing Operations Employment Costs Audit and Accountancy Corporate Marketing Directors’ Fees Depreciation Impairment of Exploration and Evaluation Assets I T Costs Overhead Allocation to Exploration Premises Costs Professional Services Travel expenses Profit on Disposal of Fixed Assets Revaluation of Shares in Listed Companies Loss on Distribution of Capital at Fair Value Other General and Admin expenses Loss before income tax Income tax expense Loss for the year Other Comprehensive Income Fair value movements on available for sale financial assets Income tax relating to comprehensive income Other comprehensive income, after tax Total Comprehensive Loss attributable to members of Helix Resources Limited Earnings Per Share Basic (cents per share) Diluted (cents per share) Note 13 14 7 19 21 21 CONSOLIDATED 2011 $ 2010 $ 353,478 431,802 (536,692) (306,714) (31,848) (45,046) (80,000) (35,381) (32,005) (9,732) (80,000) (51,298) (127,805) (5,818,552) (41,111) 131,119 (20,270) 112,013 (164,901) (143,811) (6,790) (18,171) - 240 - (105,465) (708,373) - (2,251) (4,232) 16,816 49,440 (900,000) (126,584) (6,885,378) - (708,373) (6,885,378) 588,000 176,000 - 588,000 176,000 (120,373) (6,709,378) (0.48) (0.48) (5.23) (5.23) Notes to the financial statements are included on pages 33 to 54 Helix Resources Limited Annual Report 2011 30 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 CONSOLIDATED 2011 $ 2010 $ (687,691) (622,763) 203,924 165,017 204,460 301,028 (318,750) (117,275) (3,746,492) (1,347,962) (29,751) (55,619) - 32,000 60,081 (100,000) (50,000) (50,000) (3,766,162) (1,521,581) 4,927,737 (136,620) 4,791,117 858,277 (2,159) 856,118 706,205 (782,738) 3,577,835 4,360,573 4,284,040 3,577,835 Note Cash Flow From Operating Activities Payments to suppliers and employees Interest received Other receipts Net cash used in operating activities 2(b) Cash Flow From Investing Activities Payments for capitalised exploration & evaluation expenditure Payment for property, plant & equipment Proceeds from sale of property, plant & equipment Proceeds / (Payment) for investments (Payments) / Proceeds from security deposits Net cash used in investing activities Cash Flow From Financing Activities Proceeds from issue of shares and options Share issue costs paid Net cash provided by / (used in) financing activities Net increase / (decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of financial year Cash and cash equivalents at End of Financial Year 2(a) Notes to the financial statements are included on pages 33 to 54 Helix Resources Limited Annual Report 2011 31 CONSOLIDATED 2011 Total equity at the beginning of the financial year Shares issued during the financial year Share Issue Costs STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 Share Capital Ordinary Other Reserves $ $ Accumulated Losses $ Total $ 53,571,624 1,037,930 (44,442,955) 10,166,599 2,277,000 (136,620) - - - - - 2,277,000 (136,620) 2,650,737 Exercise of options during the financial year 3,433,435 (782,698) Expiry of options during the financial year Total Comprehensive Income for the year - - Total equity at the end of the financial year 59,145,439 (17,632) 588,000 825,600 17,632 - (708,373) (120,373) (45,133,696) 14,837,343 CONSOLIDATED 2010 Total equity at the beginning of the financial year Shares issued during the financial year Options issued during the financial year Share Issue Costs Exercise of options during the financial year Share Capital Ordinary Other Reserves $ $ Accumulated Losses $ Total $ 55,815,856 61,600 (37,557,577) 18,319,879 48,290 - (2,160) 9,658 - 800,330 - - - - - - - - 48,290 800,330 (2,160) 9,658 (2,300,020) Capital Distribution via Distribution in-specie (2,300,020) Total Comprehensive Income for the year - 176,000 (6,885,378) (6,709,378) Total equity at the end of the financial year 53,571,624 1,037,930 (44,442,955) 10,166,599 Drilling at Canbelego October 2010 Notes to the financial statements are included on pages 33 to 54 Helix Resources Limited Annual Report 2011 32 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 1. SUMMARY OF ACCOUNTING POLICIES Financial Reporting Framework The financial report is a general-purpose financial report that has been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and complies with other requirements of the law. The financial report includes financial statements for Helix Resources Limited as the Consolidated Entity (Group) consisting of Helix Resources Limited and its subsidiaries. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Accounting policies Material accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. Historical cost convention These financial statements have been prepared under the historical cost convention, as modified where applicable by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property. A summary of the Group’s significant accounting policies is set out below. a) Principles of Consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Helix Resources Limited at the end of the reporting period. A controlled entity is any entity over which Helix Resources Limited has the power to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered. Where controlled entities have entered or left the Group during the year, the financial performance of those entities are included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 4 to the financial statements. In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the consolidated group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. b) Cash and Cash Equivalents Cash on hand and in banks and short term deposits are stated at nominal value. For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash within 90 days, net of outstanding bank overdrafts. c) Income Tax The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. Helix Resources Limited Annual Report 2011 33 d) Plant and Equipment Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. The depreciation rates used for each class of depreciable assets are: Plant and equipment Motor Vehicles Straight line 10% - 33% Diminishing Value 20% - 40% Diminishing Value 22.5% e) Exploration and evaluation Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. f) Leases Lease payments for operating leases where substantially all the risks and benefits remain with the lessor are charged as expenses in the periods in which they are incurred. g) Non-derivative financial instruments Financial instruments are initially measured at cost on trade date, which includes transaction costs. Subsequent to initial recognition, these instruments are measured as set out below. (i) Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss on initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. The policy of management is to designate a financial asset if there exists the possibility it will be sold in the short term and the asset is subject to frequent changes in fair value. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the reporting date. (ii) Loans and receivables Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in receivables in the Statement of Financial Position. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's management has the positive intention and ability to hold to maturity. (iv) Available-for-sale financial assets Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Purchases and sales of investments are recognised on trade-date - the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are included in the statement of comprehensive income in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non monetary securities classified as available-for-sale are recognised in equity in the available-for-sale investments revaluation reserve. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the statement of comprehensive income as gains and losses from investment securities. Helix Resources Limited Annual Report 2011 34 The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securi- ties), the Group establishes fair value by using valuation techniques. These include reference to the fair values of recent arm's length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances. The Group assesses at reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss - is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments are not reversed through the statement of comprehensive income. h) Employee Benefits Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably. Provision is made in respect of wages and salaries, annual leave and other employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Provision made in respect of long service leave which is not expected to be settled within 12 months is measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by the employees up to reporting date. Share-based payments Share-based compensation benefits are provided to employees via various Share Option Plans. The fair value of options granted is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. The fair value of the options granted excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. Upon the exercise of options, the balance of the share-based payments reserve relating to those options is transferred to share capital. The market value of shares issued to employees for no cash consideration under the Share Plans is recognised as an employee benefits expense with a corresponding increase in equity when the employees become entitled to the shares. Interest in Joint Venture Operations i) Interest in joint venture operations, where material, are brought to account by including in the respective classifications, the Group's share of the individual assets employed and liabilities and expenses incurred. Details of interests in joint ventures are shown at Note 22. Revenue Recognition j) Revenue from the disposal of assets is recognised when the Group has passed control of the goods or other assets to the buyer. Interest on bank deposits is recognised as income as it accrues. Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument and is net of GST. k) Accounts Payable Trade payables and other accounts payable are recognised when the Group becomes obliged to make future payments resulting from the purchase of goods and services. Receivables l) Other receivables are recorded at amounts due less any specific provision for doubtful debts. m) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of goods and services tax GST), except: • • where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. Helix Resources Limited Annual Report 2011 35 Impairment of Non-financial Assets n) Non-financial assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Fair Value Estimation o) The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price. The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. p) Critical Accounting Estimates and Other Accounting Judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group is of the view that there are no critical accounting estimates and judgements in this financial report, other than accounting estimates and judgements in relation to the carrying value of mineral exploration expenditure. Exploration and Evaluation Expenditure The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of resources or reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such capitalised expenditure is carried at the end of the reporting period at $9.747m. q) Provisions Mine restoration and rehabilitation costs are provided for at the present value of future expected expenditures required to settle the Group’s obligations on commencement of commercial production, discounted using a rate specified to the liability. When this provision is recognised a corresponding asset is also recognised as part of the development costs of the mine to the extent that it is considered that the provision gives access to future economic benefits. On an ongoing basis, the rehabilitation liability is re-measured at each reporting period in line with the changes in the time value of money (recognised as an expense in the statement of comprehensive income and an increase in the provision), and additional disturbances or changes in rehabilitation costs will be recognised as additions or changes to the corresponding asset and rehabilitation liability. r) Adoption of New and Revised Accounting Standards AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods and which the Group has decided not to early adopt. A discussion of those future requirements and their impact on the Group is as follows: AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2013). This Standard is applicable retrospectively and includes revised requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments. The Group has not yet determined any potential impact on the financial statements. The key changes made to accounting requirements include: - - - - simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value; simplifying the requirements for embedded derivatives; removing the tainting rules associated with held-to-maturity assets; removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost; Helix Resources Limited Annual Report 2011 36 - - - allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument; requiring financial assets to be reclassified where there is a change in an entity’s business model as they are initially classified based on: (a) the objective of the entity’s business model for managing the financial assets; and (b) the characteristics of the contractual cash flows; and requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity’s own credit risk in other comprehensive income, except when that would create an accounting mismatch. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss. s) New standards and interpretations which may impact the Company not yet adopted Whilst amendments to the Accounting Standards and Australian Accounting Interpretations have been considered, the Group does not anticipate early adoption of any of the reporting requirements and does not expect these requirements to have any material effect on the Group’s financial statements. Hado Project field visit, Chile 2011 Helix Resources Limited Annual Report 2011 37 2. NOTES TO THE CASH FLOW STATEMENT a) Reconciliation of Cash For the purposes of the statement of cash flows and statement of financial position, cash and cash equivalents include cash on hand and in banks, and investments in money market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Cash at Bank Cash at Bank – Chile Cash on deposit Total Cash b) Reconciliation of loss after income tax to cash flows used in operations Loss after income tax Non-cash flows in Loss Depreciation Impairment of Exploration and evaluation (Gain) / Loss on sale of investments Gain on revaluation of investments Gain on disposal of property, plant and equipment Loss on capital distribution Changes in Net Assets and Liabilities (Increase)/Decrease in Assets (Increase)/decrease in trade and other receivables Increase/(Decrease) in Liabilities Increase in trade and other payables Increase in provisions Net Cash used in Operations c) Non-cash Transactions Nil. 3. TRADE AND OTHER RECEIVABLES Prepayments - Insurances Other Total Current Receivables CONSOLIDATED 2011 $ 10,399 139,581 2010 $ 21,960 - 4,134,060 3,555,875 4,284,040 3,577,835 CONSOLIDATED 2011 $ (708,373) 2010 $ (6,885,378) 35,381 127,805 14,940 (240) - - 51,298 5,818,552 (5,272) (49,440) (16,816) 900,000 (23,023) 20,950 208,807 25,953 5,365 43,466 (318,750) (117,275) CONSOLIDATED 2011 $ 26,406 134,563 160,969 2010 $ 26,145 111,801 137,946 Helix Resources Limited Annual Report 2011 38 4. OTHER FINANCIAL ASSETS Current: Held for trading financial assets: Shares in listed corporations – at fair value through profit or loss Total Current Financial Assets 4(a) Shares in subsidiaries Name CONSOLIDATED 2011 $ 2010 $ 3,600 3,600 57,860 57,860 Country of Incorporation Percentage Held Percentage Held Olary Magnetite Pty Ltd Oxley Exploration Pty Ltd Leichhardt Resources (QLD) Pty Ltd Helix Resources (Overseas) Pty Ltd Helix Resources Chile Limitada Australia Australia Australia Australia Chile 2011 100% 100% 100% 100% 100% 2010 - 100% 100% 100% 100% 5. OTHER FINANCIAL ASSETS Non-Current Security Deposits Available for Sale Financial Assets: Shares in Listed Companies Total Other Assets – Non-Current CONSOLIDATED 2011 $ 2010 $ 200,000 150,000 864,000 1,064,000 276,000 426,000 Muriel Tank Battery, February 2011 Helix Resources Limited Annual Report 2011 39 6. PROPERTY, PLANT AND EQUIPMENT 2011 Gross Carrying Amount Balance at 30 June 2010 Additions Disposals Balance at 30 June 2011 Accumulated Depreciation Balance at 30 June 2010 Disposals Depreciation Balance at 30 June 2011 Net Book Value 30 June 2010 30 June 2011 2010 Gross Carrying Amount Balance at 30 June 2009 Additions Disposals Balance at 30 June 2010 Accumulated Depreciation Balance at 30 June 2009 Disposals Depreciation Balance at 30 June 2010 Net Book Value 30 June 2009 30 June 2010 CONSOLIDATED Plant & Equipment $ Motor Vehicles $ 168,798 20,387 (65,232) 123,953 149,629 (65,232) 13,576 97,973 19,169 25,980 164,721 9,363 - 174,084 84,034 - 21,805 105,839 80,687 68,245 CONSOLIDATED Plant & Equipment $ Motor Vehicles $ 165,411 3,387 - 168,798 129,440 - 20,189 149,629 35,971 19,169 171,520 52,232 (59,031) 164,721 96,773 (43,847) 31,108 84,034 74,747 80,687 Total $ 333,519 29,750 (65,232) 298,037 233,663 (65,232) 35,381 203,812 99,856 94,225 Total $ 336,931 55,619 (59,031) 333,519 226,213 (43,847) 51,297 233,663 110,718 99,856 Helix Resources Limited Annual Report 2011 40 7. EXPLORATION AND EVALUATION EXPENDITURE (NON-CURRENT) Balance at beginning of the financial year Expenditure incurred during the year Sale of Glenburgh Tenements Impairment losses Balance at the end of the financial year CONSOLIDATED 2011 $ 6,149,147 3,725,973 - (127,805) 9,747,315 2010 $ 13,815,868 1,351,831 (3,200,000) (5,818,552) 6,149,147 The Directors' assessment of carrying amount was after consideration of prevailing market conditions; previous expenditure carried out on the tene- ments; and the potential for mineralisation based on both the entity's and independent geological reports. The ultimate value of these assets is de- pendent upon recoupment by commercial development or the sale of the whole, or part, of the Group's interests in those areas for an amount at least equal to the carrying value. There may exist, on the Group’s exploration properties, areas subject to claim under native title or containing sacred sites or sites of significance to Aboriginal people. As a result, exploration properties or areas within the tenements may be subject to exploration and mining restrictions. 8. TRADE AND OTHER PAYABLES (CURRENT) Trade payables 9. PROVISIONS Current Employee Benefits Balance at end of financial year Non -Current Employee Benefits Balance at end of financial year 10. SHARE CAPITAL 203,923,618 Fully Paid Ordinary Shares (2010: 131,943,746) Balance at end of financial year CONSOLIDATED 2011 $ 2010 $ 343,842 135,035 107,119 107,119 65,845 65,845 122,541 122,541 24,469 24,469 59,145,439 53,571,624 59,145,439 53,571,624 Fully Paid Ordinary Shares Balance at beginning of financial year Captial Distribution via Distribution In - specie Share Issue Costs Exercise of Options to Fully Paid Shares @ $0.075 Exercise of Options to Fully Paid Shares @ $0.05* Share Placement Balance at end of financial year 2011 2010 No. $ No. $ 131,943,746 53,571,624 131,299,886 55,815,856 - - - - (136,620) - - - 643,860 52,179,872 19,800,000 3,433,435 2,277,000 - - (2,300,020) (2,160) 57,948 - - 203,923,618 59,145,439 131,943,746 53,571,624 Fully paid ordinary shares have no par value, carry one vote per share and carry the right to dividends. Listed options carry no votes until converted Helix Resources Limited Annual Report 2011 41 to fully paid ordinary shares. * Non-renounceable rights issue at $0.015 per option, exercisable at $0.05 before 31 May 2011 Capital Management Management controls the capital of the group in order to maximise the return to shareholders and ensure that the group can fund its operations and continue as a going concern. Management effectively manages the group’s capital by assessing the group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of expenditure and debt levels, distributions to shareholders and share and option issues. There have been no changes in the strategy adopted by management to control the capital of the group since the prior year. Employee Options 17,600,000 employee options were issued in October 2008 following approval at the 2008 AGM. The options were valued under Black and Scholes at 0.35 cents each ($61,600) and were in substitute of a cash bonus. Value at Grant Date [also Issuance Date] of 10th October 2008 A Black & Scholes calculation [www.blobek.com] of the notional value of the Incentive Options is outlined below based on the following assumptions: a. b. c. d. e. f. g. the Incentive Options expire on 31 October 2011 and are exercisable at $0.55 each; a current price per Share of $0.08; a volatility factor of 70%; an interest rate of 5.38%; a discount factor of 50% has been applied due to the lack of marketability of the Incentive Options; the valuations ascribed to the Incentive Options may not necessarily represent the market price of the Incentive Options at the date of the valuation; and the valuation date for the Incentive Options was 10th October 2008. Applying the 50% discount factor as described in (e) above, the value for each Incentive Option is therefore $0.0035 at 10th October 2008, the date of issuance. There were 17,600,000 employee options outstanding at 30 June 2011. 11. OTHER RESERVES Listed Options Balance at beginning of financial year Options expired during financial year Options issued during financial year * Exercise of Options to Fully Paid Shares Balance at end of financial year Employee Incentive Options Balance at beginning of financial year Issue of Employee Incentive Options Exercise of Employees Incentive Options Expiry of Terminated Employee Incentive Options 2011 2010 No. $ No. $ 53,355,308 (1,175,436) - 800,330 (17,632) - (52,179,872) (782,698) - - - - 53,999,168 (643,860) 53,355,308 - - 809,988 (9,658) 800,330 2011 2010 No. $ No. $ 17,600,000 61,600 17,600,000 61,600 - - - - - - - - - - - - 17,600,000 61,600 Balance at end of financial year The Options Reserve records items recognised as expenses on valuation of employee incentive options. 17,600,000 61,600 Helix Resources Limited Annual Report 2011 42 Financial Assets Reserve Balance at beginning of financial year Fair Value of Gascoyne Resources shares Balance at end of financial year The financial asset reserve records revaluation of financial assets. 12. ACCUMULATED LOSSES Balance at beginning of financial year Net Loss attributable to members of the parent entity Expiry of Listed Options Balance at end of financial year 13. REVENUE Loss before Income Tax includes the following items of revenue and expense: Operating Activities Interest Revenue Tenement Rental Reimbursements Other Total Operating Revenue Non-Operating Activities Profit / (Loss) on sale of investments Total Non – Operating Revenue Total Revenues 14. LOSS FOR THE YEAR Expenses Depreciation of non-current assets: Property, plant and equipment Impairment of exploration and evaluation expenditure Operating lease rental expenses: Minimum lease payments Loss for the year CONSOLIDATED 2011 $ 2010 $ 176,000 588,000 764,000 - 176,000 176,000 (44,442,955) (37,557,577) (708,373) (6,885,378) 17,632 - 45,133,696 (44,442,955) CONSOLIDATED 2011 $ 2010 $ 203,401 72,775 92,242 368,418 (14,940) (14,940) 353,478 174,398 65,818 186,314 426,530 5,272 5,272 431,802 CONSOLIDATED 2011 $ 35,381 127,805 151,811 2010 $ 51,298 5,818,552 132,914 708,373 6,885,378 Helix Resources Limited Annual Report 2011 43 15. COMMITMENTS a) Operating Lease Commitments Not later than 1 year Later than 1 year but not later than 2 years Later than 2 years but not later than 5 years 123,444 36,307 - 159,751 99,756 104,744 22,321 226,821 The lease is for a 4 year term with a 2 year option to extend. As at reporting date there was a balance of 1 year and 3 months remaining on the office lease. b) Exploration Expenditure Commitments In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum exploration work to meet the requirements specified by various State governments. These obligations can be reduced by selective relinquishment of exploration tenure or application for expenditure exemptions. Due to the nature of the Group’s operations in exploring and evaluating areas of interest, it is very difficult to forecast the nature and amount of future expenditure. It is anticipated that expenditure commitments for the next twelve months will be tenement rentals of $66,280 (2010:$83,305) and exploration expenditure of $2,274,000 (2010: $1,250,000). JV parties are expected to fund $1,000,000 of these commitment costs. 16. KEY MANAGEMENT PERSONNELS’ REMUNERATION Please refer to disclosures contained in the Remuneration Report section of the Directors’ Report. The totals of remuneration paid to key management personnel of the Group during the year are as follows: Short term employee benefits Post-employment benefits Other long-term benefits Termination benefits Share Based payments Total 2011 $ 838,873 64,420 - - - 903,293 2010 $ 561,694 43,352 - - - 605,046 17. EXECUTIVE SHARE OPTION PLAN As at 30 June 2011 the Company had issued 15,500,000 share options (30 June 2010 15,500,000). Share options carry no rights to dividends and no voting rights. The difference between the total market value of options issued during the financial year, at the date of issue, and the total amount received from executives and employees is not recognised in the financial statements except for the purposes of determining key management personnels’ remuneration in respect of that financial year. The amounts are disclosed in remuneration in respect of the financial year in which the entitlement was earned. Further details are disclosed below: Executive Share Option Plan Balance at beginning of financial year (i) Cancelled during the financial year (ii) Granted during the financial year (iv) Exercised during the financial year (v) Balance at end of financial year (vi) Expired during the financial year (iii) 2011 exercise price No. Weighted average $0.525 15,500,000 2010 exercise price No. Weighted average $0.525 15,500,000 - - - - - - - - - - - - - - - - 15,500,000 $0.525 15,500,000 $0.525 Helix Resources Limited Annual Report 2011 44 (i) Balance at beginning of financial year Options - Series No. Vested Unvested Grant Date Expiry Date Exercise Price grant date $ Fair value at 0.35c per option $0.525 Issued 9 Oct 2008 15,500,000 15,500,000 15,500,000 15,500,000 - - 9 Oct 2008 31 Oct 2011 (ii) Cancelled during the financial year There were no options cancelled during the financial years ended 30 June 2011 and 2010. (iii) Expired during the financial year No options expired during the financial year ended 30 June 2011 and 2010. (iv) Granted during the financial year There were no options granted during the financial year ended 30 June 2011 and 2010. (v) Exercised during the financial year There were no executive options exercised during the financial years ended 30 June 2011 and 2010. (vi) Balance at end of the financial year Options Series Issued 9 Oct 2008 15,500,000 15,500,000 No. Vested Unvested Grant Date Expiry Date Exercise Price $ Fair value at grant date 15,500,000 15,500,000 - - 9/10/08 31/10/11 $0.525 0.35c per option Fair value of consideration received is measured as the nominal value of cash receipts on conversion. The fair value of shares at the date of their issue is measured as the market value at close of trade on the date of their issue. Employee share options carry no rights to dividends and no voting rights. In accordance with the terms of the executive share option plan, options may be exercised at any time from the date the vesting period ends to the date of their expiry. The difference between the total market value of options issued during a financial year, at the date of issue, and the total amount received from executives and employees is not recognised in the financial statements except for the purposes of determining key management personnels’ remunerations in respect of that financial year as disclosed in note 16 to the financial statements. The amounts are disclosed in remuneration in respect of the financial years over which the entitlement was earned. Consideration received on the exercise of executive options is recognised in contributed equity. During the financial year no options were exercised, hence no amount was recognised in contributed equity arising from the exercise of executive options (2010: $nil). 18. RELATED PARTY AND DIRECTORS’ DISCLOSURES a) Other Transactions with key management personnel The loss from ordinary activities before income tax includes the following items of expenses that resulted from transactions other than remuneration with key management personnel or their personally-related entities. Transactions between related parties are on normal commercial terms and conditions unless otherwise stated. Greg Wheeler Consulting Pty Ltd provided professional services to the value of $nil (2010 $60,000) payable within 30 days from date of invoice (net of GST). Mr Greg Wheeler, a Director, has significant influence in Greg Wheeler Consulting Pty Ltd. There were no balances outstanding at 30 June 2011 to Mr Greg Wheeler. b) Transactions with Gascoyne Resources Limited Helix Resources provided equipment rental, accommodation and employee services to Gascoyne Resources on normal commercial terms and conditions to the value of $90,389 (2010: $168,785). There was no outstanding balance at 30 June 2011 (2010: $6,103). Helix Resources Limited Annual Report 2011 45 c) Key Management Personnels’ Equity Holdings Fully paid ordinary shares issued by Helix Resources Limited 2011 Granted as remuneration Balance @ 1/7/10 No. No. Received on exercise of options No. Net other change No. Balance @ 30/6/11 Balance held nominally No. No. Key Management Personnel G J Wheeler M H Wilson J den Dryver G Dunbar J McNamara Total 2010 Key Management Personnel G J Wheeler M H Wilson J den Dryver G Dunbar J McNamara Total 7,248,839 233,133 - 300,000 94,833 7,876,805 - - - - - - 9,624,420 2,116,567 600,000 750,000 47,417 13,138,404 Balance @ 1/7/09 Granted as remuneration No. No. Received on exercise of options No. Net other change No. 7,248,839 233,133 - 300,000 94,833 7,876,805 - - - - - - - - - - - - - - - - - - - - - - - - 16,873,259 2,349,700 600,000 1,050,000 142,250 21,015,209 - - - - - - Balance @ 30/6/10 Balance held nominally No. No. 7,248,839 233,133 - 300,000 94,833 7,876,805 - - - - - - Options vested during year No. Executive Share Options issued by Helix Resources Limited 2011 Exercised Bal @ 1/7/10 Granted as remuneration Other change Bal @ 30/6/11 Bal vested @ 30/6/11 Vested but not exerciseable Vested and exercisable No. No. No. No. No. No. No. No. Key Management Personnel G J Wheeler M H Wilson J denDryver G Dunbar 8,000,000 5,000,000 1,000,000 1,000,000 J McNamara 500,000 Total 15,500,000 - - - - - - - - - - - - - - - - - - 8,000,000 8,000,000 5,000,000 5,000,000 1,000,000 1,000,000 1,000,000 1,000,000 500,000 500,000 15,500,000 15,500,000 - - - - - - 8,000,000 5,000,000 1,000,000 1,000,000 500,000 15,500,000 - - - - - - Helix Resources Limited Annual Report 2011 46  2010 Bal @ 1/7/09 Granted as remuneration Exercised Other change Bal @ 30/6/10 Bal vested @ 30/6/10 Vested but not exerciseable Vested and exercisable No. No. No. No. No. No. No. No. Options vested during year No. Key Management Personnel G J Wheeler M H Wilson J denDryver G Dunbar 8,000,000 5,000,000 1,000,000 1,000,000 J McNamara 500,000 Total 15,500,000 - - - - - - - - - - - - - - - - - - 8,000,000 8,000,000 5,000,000 5,000,000 1,000,000 1,000,000 1,000,000 1,000,000 500,000 500,000 15,500,000 15,500,000 - - - - - - 8,000,000 5,000,000 1,000,000 1,000,000 500,000 15,500,000 - - - - - - Each executive share option converts into 1 ordinary share of Helix Resources Limited on exercise. No amounts are paid or payable by the recipient on receipt of the option. During the financial year, no executive share options were exercised by key management personnel. Further details of the options granted during the year are contained in note 17 to the financial statements. Listed Share Options issued by Helix Resources Limited Exercised 2011 Bal @ 1/7/10 Granted as remuneration Other change Bal @ 30/6/11 Bal vested @ 30/6/10 Vested but not exerciseable Vested and exercisable No. No. No. No. No. No. No. No. Options vested during year No. Key Management Personnel G J Wheeler M H Wilson J denDryver G Dunbar 9,624,420 2,116,567 600,000 750,000 J McNamara 47,417 13,138,404 Total 2010 Key Management Personnel G J Wheeler M H Wilson J denDryver G Dunbar J McNamara Total - - - - - - 9,624,420 2,116,567 600,000 750,000 47,417 13,138,404 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Bal @ 1/7/09 Granted as remuneration Exercised Other change Bal @ 30/6/10 Bal vested @ 30/6/10 Vested but not exerciseable Vested and exercisable No. No. No. No. No. No. No. No. Options vested during year No. - - - - - - - - - - - - - - - - - - 9,624,420 9,624,420 9,624,420 2,116,567 2,116,567 2,116,567 600,000 600,000 600,000 750,000 750,000 750,000 47,417 47,417 47,417 13,138,404 13,138,404 13,138,404 - - - - - - 9,624,420 2,116,567 600,000 750,000 47,417 13,138,404 - - - - - - Helix Resources Limited Annual Report 2011 47 19. INCOME TAX Accounting profit / (loss) before tax from continuing operations Accounting profit / (loss) loss before tax from discontinuing operations Accounting profit / (loss) before tax Reconciliation of Income Tax Expense / (Benefit) to Accounting Profit / (Loss) Prima facie tax payable / (benefit) at Australian rate of 30% (2010 – 30%) Prima facie tax payable / (benefit) at Chilean rate of 20% Adjusted for tax effect of the following: - non-deductible expenses - revaluation of investments - taxable gain on sale of investments - loss on capital distribution - taxable gain on expiry of options - capital raising costs put to equity Current year tax losses not recognised in current period Income tax expense / (benefit) Statement of Comprehensive Income Current income tax charge Deferred income tax Relating to origination and reversal of temporary differences Current year tax losses not recognised / (recognised) in the current period Prior year tax losses recognised in current period Income tax expense / (benefit) reported in statement of comprehensive income Unrecognised Deferred Tax Balances: Australian deferred tax asset losses Chilean deferred tax asset losses Australian deferred tax assets other Australian deferred tax liabilities Chilean deferred tax liabilities Net Unrecognised deferred tax assets CONSOLIDATED 2011 $ 2010 $ (708,373) (6,885,378) - - (708,373) (6,885,378) (201,065) (2,065,613) (7,631) - 1,637 (72) 10,350 - 5,290 697 (14,832) 1,575 270,000 - (28,066) (31,380) 219,557 1,839,553 - - - - (966,643) (2,321,276) 966,643 (1,839,553) - - (481,723) - 14,212,583 13,254,063 227,631 58,734 - 56,036 (2,596,777) (1,847,484) (220,000) - 11,682,171 11,462,615 Helix Resources Limited Annual Report 2011 48 20. SEGMENT INFORMATION The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (Chief Operating decision makers) in assessing performance and determining the allocation of resources. The Group is managed on the basis it is a mineral exploration company operating predominately in the geographical region of Australia, mainly in Western Australia, New South Wales and South Australia, with a developing operation in Chile which currently represents ±10% of mineral asset expenditure. The mineral assets held via outright ownership or joint venture are considered one business segment and the minerals currently being targeted include gold, copper, iron ore and other base metals. Decisions are made on a prospectivity basis, not a geographical or commodity basis. Australia Chile Total 2011 2010 2011 2010 2011 2010 4,144,460 3,577,835 139,580 - 4,284,040 3,577,835 Current Assets Cash Non-Current Assets Mineral Assets 8,736,964 11,868,251 1,138,156 99,448 Impairment (89,649) (5,818,552) (38,156) - Carrying Amount 8,647,315 6,049,699 1,100,000 99,448 9,875,120 (127,805) 9,747,315 11,967,699 (5,818,552) 6,149,147 21. EARNINGS PER SHARE Basic loss per share Diluted loss per share COMPANY 2011 Cents Per share (0.48) (0.48) 2010 Cents Per share (5.23) (5.23) Basic Loss per Share The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: 2011 2010 $ Earnings / (loss) (a) (708,373) (6,885,378) 2011 No. 2010 No. Weighted average number of ordinary shares (b) 147,916,287 131,653,710 (a) Earnings used in the calculation of basic earnings per share is net loss after tax of $708,373 (2010: $6,885,378). (b) The executive share options are not considered to be potential ordinary shares and are therefore excluded from the weighted average number of shares used in the calculation of basic earnings per share. Where dilutive, potential ordinary shares are included in the calculation of diluted earnings per share (refer below). Diluted Loss per Share The earnings and weighted average number of ordinary and potential ordinary shares used in the calculation of diluted earnings per share are as follows: Earnings (a) 2011 $ (708,373) 2010 $ (6,885,378) 12 months to 30 June 2011 12 months to 30 June 2010 No. No. Helix Resources Limited Annual Report 2011 49 Weighted average number of ordinary shares and potential ordinary shares (b) (a) Earnings used in the calculation of diluted loss per share is net loss after tax of $708,373 (2010: $6,885,378). (b) The following potential ordinary shares are not dilutive and are therefore excluded from the weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share: 131,653,710 147,916,287 Executive options Listed options 2011 No. 15,000,000 - 2010 No. 15,000,000 53,355,308 INTEREST IN JOINT VENTURES 22. The parent entity has entered into the following unincorporated joint ventures: Joint Venture Project Tunkillia Yalleen Restdown JV Percentage Interest 46.2% (2010: 48.32%) (Minotaur Exploration) 30% (2010: 30%) (API Management Pty Ltd 70% Iron Ore rights) 70% (2010: 0%) (Isokind Pty Ltd) Principal Exploration Activities Gold Iron Ore Gold Canbelego 51% (2010: 51%) (Straits Resources) Copper / Gold The joint ventures are not separate legal entities but are contractual arrangements between the participants for sharing costs and output and do not in themselves generate revenue and profit. Exploration expenditure is the only asset of the joint ventures. The Group’s interest in exploration expenditure in the above mentioned joint ventures is as follows: Non-Current Assets Mineral Assets Impairment Carrying Amount Yalleen JV 30% Tunkillia JV 46.2% Restdown JV 70% Canbelego JV 51% 2,623,169 3,012,234 1,414,212 - - - 2,623,169 3,012,234 1,414,212 530,942 - 530,942 The recoverability of the carrying amount of the mineral assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. Drill sampling at Canbelego October 2010 Helix Resources Limited Annual Report 2011 50 23. FINANCIAL INSTRUMENTS Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which revenues and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements. The Group's exposure to interest rate risk and effective weighted average interest rate for classes of financial assets is set out below: Floating Interest Rate Maturity Average Interest Rate % Fixed Interest Rate Less than 1 year More than 1 Year Non Interest Bearing $ $ $ $ Total $ 2011 Financial Assets Other Receivables (incl tenement appl.) Held for trading assets Cash and cash equivalent assets Security deposits and deposits at financial institutions Available for sale assets 5.25 6.03 Financial Liabilities Trade Payables (all payable within 30 days) - - - - - 2,284,040 2,000,000 - - 200,000 - 2,284,040 2,200,000 - - - - - - - - - - - - 160,969 3,600 - - 864,000 160,969 3,600 4,284,040 200,000 864,000 1,028,569 5,512,609 343,842 343,842 343,842 343,842 Floating Interest Rate Maturity Average Interest Rate % Fixed Interest Rate Less than 1 year More than 1 Year Non Interest Bearing $ $ $ $ Total $ - - - - 5.0% 1,077,835 2,500,000 3.75% - - 150,000 - 1,077,835 2,650,000 - - - - - - - - - - - - 137,946 57,860 - - 276,000 471,806 135,035 135,035 137,946 57,860 3,577,835 150,000 276,000 4,199,641 135,035 135,035 2010 Financial Assets Other Receivables (incl tenement appl.) Held for trading assets Cash and cash equivalent assets Security deposits and deposits at financial institutions Available for sale assets Financial Liabilities Trade Payables (all payable within 30 days) Other than those classes of assets and liabilities denoted as "listed" in note 4, none of the classes of financial assets and liabilities are readily traded on organised markets in standardised form. Financial Instruments Measured at Fair Value The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels: — quoted prices in active markets for identical assets or liabilities (Level 1); Helix Resources Limited Annual Report 2011 51 — inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and — inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). 2011 Financial Assets Held for trading assets Available for sale assets 2010 Financial Assets Held for trading assets Available for sale assets Level 1 3,600 864,000 867,600 Level 1 57,860 276,000 333,860 Total $ 3,600 864,000 867,600 Total $ 57,860 276,000 333,860 Included within Level 1 of the hierarchy are listed investments. The fair values of these financial assets have been based on the closing quoted bid prices at reporting date, excluding transaction costs. Financial Risk Exposures and Management The main risks the group is exposed to through its financial instruments are interest rate risk, liquidity risk and credit risk. The Board is responsible for the financial risk management. Interest Rate Risk Interest rate risk is managed by investing cash with major financial institutions in both cash on deposit and term deposit accounts. Interest Rate Risk Sensitivity Analysis At 30 June 2011, the effect on loss and equity as a result of a 2% increase in the interest rate, with all other variables remaining constant would be a decrease in loss by $79,000 (2010: $79,000) and an increase in equity by $79,000 (2010: $79,000). The effect on loss and equity as a result of a 2% decrease in the interest rate, with all other variables remaining constant would be an increase in loss by $79,000 (2010: $79,000) and a decrease in equity by $79,000 (2010: $79,000). Liquidity Risk The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained. The Group’s operations require it to raise capital on an on-going basis to fund its planned exploration program and to commercialise its tenement assets. If the Group does not raise capital in the short term, it can continue as a going concern by reducing planned but not committed exploration expenditure until funding is available and/or entering into joint venture arrangements where exploration is funded by the joint venture partner. Credit Risk Credit Risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group measures risk on a fair value basis. The maximum credit risk on financial assets of the Group which have been recognised on the statement of financial position, other than investments in shares, is generally the carrying amount, net of any provisions for doubtful debts. Helix Resources Limited Annual Report 2011 52 24. EMPLOYEE BENEFITS The aggregate employee benefits liability recognised and included in the financial statements is as follows: Provision for employee benefits: Current (Note 9) Non-Current (Note 9) Number of employees at end of financial year 25. CONTINGENT LIABILITIES CONSOLIDATED 2011 $ 2010 $ 107,119 65,845 172,964 No 9 122,541 24,469 147,010 No 6 Bank Guarantees The Company may be required to issue bank guarantees to secure tenement holdings. The Company currently has bank guarantees to the value of $87,000 (2010: $77,085). Mineral Rent Resource Tax In the absence of legislation on this matter the Company is unable to determine whether any liability exists. Carbon Tax On 10 July 2011, the Commonwealth Government announced the “Securing a Clean Energy Future – the Australian Government’s Climate Change Plan”. Whilst the announcement provides further details of the framework for a carbon pricing mechanism, uncertainties continue to exist on the impact of any carbon pricing mechanism on the Group as legislation must be voted on and passed by both houses of Parliament. In addition, as the Group will not fall within the “Top 500 Australian Polluters”, the impact of the Carbon Scheme will be through indirect effects of increased prices on many production inputs and general business expenses as suppliers subject to the carbon pricing mechanism are likely to pass on their carbon price burden to their customers in the form of increased prices. Directors expect that this will not have a significant impact upon operation costs within the business, and therefore will not have an impact upon the valuation of assets and/or going concern of the business. 26. REMUNERATION OF AUDITORS a) Auditor of the Parent Entity Auditing the financial report The auditor of Helix Resources Limited for the 2011 financial year is Grant Thornton Audit Pty Ltd. 2011 $ 2010 $ 23,923 23,923 21,555 21.555 Drilling at Good Friday Prospect, Restdown April 2011 Helix Resources Limited Annual Report 2011 53 27. HELIX RESOURCES LIMITED PARENT COMPANY INFORMATION Note 8, 9 9 Assets Current Assets Non-current Assets Total Assets Liabilities Current Liabilities Non-current Liabilities Total Liabilities Equity Issued Capital Accumulated Losses Reserves Options Reserve Financial Assets Total Equity Financial Performance Loss for the year 14 Other comprehensive income Total Comprehensive Income 2011 $ 2010 $ 4,309,028 11,045,121 3,773,641 6,675,003 15,354,149 10,448,644 450,961 65,845 516,806 257,576 24,469 282,045 59,145,439 54,371,954 (45,133,696) (44,442,955) 61,600 764,000 61,600 176,000 14,837,343 10,166,599 (708,373) 588,000 (120,373) (6,885,378) 176,000 (6,709,378) 28. SUBSEQUENT EVENTS There has not been any matter or circumstance, other than referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs on the Group in future financial years. 29. ADDITIONAL COMPANY INFORMATION Helix Resources Limited is a listed public company, incorporated and operating in Australia. Registered Office Suite 7, 29 Ord Street WEST PERTH WA 6005 Tel (08) 9321 2644 Principal Place of Business Suite 7, 29 Ord Street WEST PERTH WA 6005 Tel (08) 9321 2644 The financial report for Helix Resources Limited for the year ended 30 June 2011 was authorised for issue in accordance with a resolution of the directors on the 15 September 2011. Helix Resources Limited Annual Report 2011 54 Spread of Holdings 1–1000 1,001–5,000 5,001–10,000 10,001–100,000 100,001 and over Total Number of shareholders holding less than a marketable parcel PERCENTAGE HELD BY 20 LARGEST SHAREHOLDERS Shareholder 1 Yandal Investments 2 Gee Vee Pty Ltd 3 Rubicon Nominees Pty Ltd 4 Brisbane Investments Ltd 5 Wythenshawe Pty Ltd 6 BTX Pty Ltd 7 Blamnco Trading Pty Ltd 8 Berne No 132 Nominees Pty Ltd 9 Niddrie Holdings Pty Ltd 10 Penoir Pty Ltd 11 Technica Pty Ltd 12 JP Morgan Nominees Australia 13 MH Wilson 14 HJH Nominees Pty Ltd 15 Mr Bulent Besim 16 BJF Capital Pty Ltd 17 Loxden Pty Ltd 18 Aotea Minerals Ltd 19 Warramboo Holdings 20 Zero Nominees Pty Ltd Top 20 Total AS AT 14th SEPTEMBER 2011 NUMBER OF SHARES HELD Number of Shares Number of Shareholders 80 195 322 790 231 1,618 400 30,325 615,976 2,783,392 29,685,529 170,808,396 203,923,618 1,503,076 Number of Shares % of Issued Capital 21,172,514 16,873,259 13,063,829 13,063,829 5,089,102 4,681,293 4,000,000 3,702,600 3,003,673 3,000,000 2,784,999 2,605,661 2,349,700 2,040,000 2,000,000 2,000,000 1,800,000 1,630,000 1,364,213 1,306,802 10.38 8.27 6.41 6.41 2.50 2.30 1.96 1.82 1.47 1.47 1.37 1.28 1.15 1.00 0.98 0.98 0.88 0.80 0.67 0.64 107,531,474 52.74 VOTING RIGHTS One vote for each ordinary share held in accordance with the Company's Constitution. Helix Resources Limited Annual Report 2011 55 SUBSTANTIAL SHAREHOLDERS Shareholder Yandal Investments Pty Ltd Gee Vee Pty Ltd Rubicon Nominees Pty Ltd Brisbane Investments Ltd DIRECTORS' INTEREST IN SHARE CAPITAL Director G J Wheeler M H Wilson J den Dryver G Dunbar Total Fully Paid Ordinary Shares 16,873,259 2,349,700 600,000 1,050,000 20,872,959 Number of Shares % of Issued Capital 21,172,514 16,873,259 13,063,829 13,063,829 10.38 8.27 6.41 6.41 Staff Options 8,000,000 5,000,000 1,000,000 1,000,000 15,000,000 Helix Resources Limited Annual Report 2011 56 TENEMENT SCHEDULE Tenement Name Mineral Ownership NSW COPPER & GOLD PROJECTS (INCL. CANBELEGO AND RESTDOWN JV's) EL6105 EL6140 Canbelego Copper/Gold HLX 51% (earning 70%), Straits 49% Restdown Gold/Copper Helix 70%, Glencore 30% EL6501 South Restdown Copper/Gold Helix 70%, Glencore 30% Muriel Tank Gold/Copper Helix 70%, Glencore 30% EL6739 EL7438 EL7439 EL7482 EL7565 EL7566 EL7567 EL7619 EL7745 Quanda Fiveways Copper/Gold Copper/Gold Little Boppy Copper/Gold Arsenal Copper/Gold Tottenham Copper/Gold Restdown Copper/Gold Inverness Copper/Gold Koree Copper/Gold QUEENSLAND COPPER & GOLD PROJECTS EPM18363 Landsborough Copper/Gold EPM18373 EPM18374 Saxby 2 Saxby 1 Copper/Gold Copper/Gold LAKE EVERARD (INCL. TUNKILLIA) HLX 100% HLX 100% HLX 100% HLX 100% HLX 100% HLX 100% HLX 100% HXL 100% HLX 100% HLX 100% HLX 100% EL4596 Yellabinna Gold/Uranium/Basemetals HLX 100%, Minotaur 51% all minerals other than uranium ELA2010/183 Lake Everard Gold/Uranium/Basemetals HLX 100%, Minotaur 51% all minerals other than uranium EL4495 Lake Everard West OLARY MAGNETITE Gold/Uranium/Basemetals HLX 100%, Minotaur 51% all minerals other than uranium EL3956 EL4022 Devonborough Downs Gold/Copper/Iron Ore Olary Gold/Copper/Iron Ore HLX 100% HLX 100% YALLEEN IRON ORE PROJECT E47/1169-I E47/1170-I E47/1171-I Yalleen Yalleen Yalleen Iron ore/Basemetals HLX 100%, API Management Pty Ltd 70% iron ore rights Iron ore/Basemetals HLX 100%, API Management Pty Ltd 70% iron ore rights Iron ore/Basemetals HLX 100%, API Management Pty Ltd 70% iron ore rights Abbreviations and Definitions used in Schedule: EL, EPM or E Exploration Licence ELA Exploration Licence Application Helix Resources Limited Annual Report 2011 57 CORPORATE DIRECTORY Executive Chairman Non-executive Director Non-executive Director Technical Director Directors Greg J Wheeler John den Dryver Gordon Dunbar Michael Wilson Australian Business Number 27 009 138 738 Head and Registered Office Suite 7, 29 Ord Street West Perth Western Australia 6005 PO Box 825 West Perth Western Australia 6872 Telephone: +61 8 9321 2644 Facsimile: +61 8 9321 3909 Email: helix@helix.net.au Website: www.helix.net.au Share Registry Advanced Share Registry 150 Stirling Highway Level 6, 225 Clarence Street Nedlands Western Australia 6009 Sydney NSW 2000 PO Box 1156 Nedlands Western Australia 6909 PO Box Q1736 Queen Victoria Building NSW 1230 Telephone: +61 8 9389 8033 +61 2 8096 3502 Facsimile: +61 8 9389 7871 Auditor Grant Thornton Audit Pty Ltd Level 1, 10 Kings Park Road West Perth Western Australia 6005 Telephone: +61 8 9480 2000 Facsimile: +61 8 9322 7787 Stock Exchange The Company Securities are quoted on the Australian Stock Exchange Limited CODE: HLX Helix Resources Limited Annual Report 2011 58 

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